Cicchetti Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of December: |
Cicchetti Corporation Comparison of Actual Results to Planning Budget For the Month Ended December 31 |
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Actual Results |
Planning Budget | Variances | |||||
Customers served | 31,000 | 30,000 | |||||
Revenue (3.50q) | $ | 108,800 | $ | 105,000 | $ | 3,800 | F |
Expenses: | |||||||
Wages and salaries ($23,000 + $1.20q) | 60,200 | 59,000 | 1,200 | U | |||
Supplies ($0.60q) | 16,100 | 18,000 | 1,900 | F | |||
Insurance ($4,900) | 4,900 | 4,900 | 0 | ||||
Miscellaneous expense ($3,900 + $.40q) | 14,000 | 15,900 | 1,900 | F | |||
Total expense | 95,200 | 97,800 | 2,600 | F | |||
Net operating income | $ | 13,600 | $ | 7,200 | $ | 6,400 | F |
Required: |
1. |
Prepare a report showing the company’s revenue and spending variances for December. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) |
Revenue and spending Variance | ||||
Actual Results | Revenue and spending Variance | Flexible Budget | ||
Customer served | 31000 | 31000 | ||
Revenue | 108800 | 300 | F | 108500 |
Expenses | ||||
Wages and salaries | 60200 | None | 60200 | |
Supplies | 16100 | 2500 | F | 18600 |
Insurance | 4900 | None | 4900 | |
Miscellaneous Expenses | 14000 | 2300 | F | 16300 |
Total expenses | 95200 | 4800 | F | 100000 |
Net Operating Income | 13600 | 5100 | F | 8500 |
Flexible Budget | ||||
Revenue = 3.50 * 31,000 = $ 108,500 | ||||
Wages and salaries = $ 23,000 + ( 1.20 * 31,000 ) = $ 60,200 | ||||
Supplies = 0.60 * 31000 = $ 18,600 | ||||
Miscellaneous expenses = $ 3,900 + ( .40 * 31,000 ) = $ 16,300 | ||||
Cicchetti Corporation uses customers served as its measure of activity. The following report compares the planning...
Cicchetti Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of December: Cicchetti Corporation Comparison of Actual Results to Planning Budget For the Month Ended December 31 Actual Results Planning Budget Variances Customers served 38,000 36,000 Revenue ($4.9q) $ 187,200 $ 176,400 $ 10,800 F Expenses: Wages and salaries ($37,500 + $1.7q) 105,600 98,700 6,900 U Supplies ($0.6q) 22,200 21,600 600 U Insurance ($14,500) 14,950...
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